ARTICLE · 30 JULY 2012

What is the difference between an independent contractor and an employee?

Colin Biggers & Paisley

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Many people appointed as contractors are not really in business or truly independent, but are dependent on a principal.

AustraliaEmployment and HR

In brief - Independent contractors must be "in business" and truly independent

There are significant contrasting features between a person who is an employee and an independent contractor. An employee is in a relationship of personal service. An independent contractor is a business person.

Independent contractors being "in business" is critical

Many people who are appointed as contractors are not really in business or truly independent, but rather are dependent on a principal.

In fact between about one quarter and 40% of all supposed independent contractors are in fact dependent and work for one entity.

Appointing independent contractors who are working under disadvantageous conditions may be good in the short term, but such relationships usually do not work out in the long term and tend not to be permanent.

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